Competitive Electric Shopping 101 April 22, 2014 The
Pennsylvania Utility Law Project
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Pennsylvania Utility Law Project Who We Are: A specialized
legal aid program of the Pennsylvania Legal Aid Network Our
Mission: To assist Pennsylvania households with limited income to
connect with and maintain affordable utility and energy
services.
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What We Do On behalf of low income utility consumers across the
Commonwealth, PULP provides: o Education o Training o Advocacy o
Assistance o Representation
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Objectives Participants will be able to: Explain the basic
structure of competitive electric shopping. Identify resources
available to help compare and assess offers for competitive
service. Recall basic issues confronting low-income electric
consumers in the competitive market.
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It is critical for supportive housing service providers to
understand and articulate: Whether it is beneficial to switch to a
supplier or return to a default service provider. How to switch to
a competitive supplier or return to a default service provider. 5
Why is this session important?
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Constant Economic Pressure Vulnerable to promises of savings,
particularly savings on essential services. High-Pressure Sales
Tactics Inflexible or Misleading Terms Unclear and/or Unfamiliar
Language 6 Primary Concerns for Low Income Shopping
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Overarching Concern = Cost MESSAGE TO CONSUMERS: Consumers can
save money by switching to an alternative supplier. This is the
message of: the PUC the electric distribution companies the
suppliers FACT: Consumers are not guaranteed to save money when
switching to an alternate supplier, and often experience increased
costs. 7
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Electricity Basics
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Historically, electric utilities provided all three components
of electric service.
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Evolution of Electric Choice 1996: Statutory change allowed
competition in the GENERATION portion of the electric industry.
Regulated electric companies retained control of service delivery
(poles and wires). 10
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Residential customers are inundated with offers to choose their
electric supplier. Mail solicitations E-mail & Fax
solicitations Telephone solicitations Door-to-Door Sales
Approximately 300 suppliers, brokers, or marketers currently offer
retail electric services throughout Pennsylvania. 11 Effect of
Restructuring
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The Public Utility Commission (PUC) The state regulatory agency
that provides oversight, policy guidance, and direction to electric
public utilities. Regulates electric distribution companies (EDCs)
by setting rates, terms and conditions of service Oversees the
competitive electric market by licensing electric generation
suppliers (EGSs) and establishing marketing regulations. 12
Terminology
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Electric Distribution Companies (EDCs) The company that owns
the power lines and equipment necessary to deliver purchased
electricity to the customer. Regulated monopolies Responsible for
billing, meters, outages, disconnection and reconnection of service
Responsible for Universal Service and Energy
Efficiency/Conservation Programs (Act 129) 13 Terminology
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Electric Generation Suppliers (EGSs) Any individual or entity
that sells electricity to customers using the transmission or
distribution facilities of an electric distribution company (EDC).
EGSs: Must be licensed by the PUC Generally buy energy on the
wholesale market and resell it to residential customers Prices and
terms of service are typically governed by contract between the
supplier and customer without PUC regulation or approval. 14
Terminology
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Shopping Basics
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Are Consumers Required to Shop? No. Shopping for electricity is
voluntary. EDCs must provide electricity to non-shopping customers
at the least cost over time and with no mark-up. 16
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SoWhy Shop for Electricity? Potential savings Desire to
purchase clean, renewable electricity - even at a higher cost
Unique service needs 17 Photo Credit: Philly.com
http://media.philly.com/images/102313_outlets_600. jpg
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Switching is Multidirectional Default Service Supplier
ASupplier B
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How Does a Consumer Switch? (1) KNOW THE PRICE Look for the
EDCs Price to Compare (PTC) The Price to Compare (PTC ) is the
price per kilowatt-hour (kWh) that the utility charges for the
portion of its service that is subject to competition. Compare the
PTC to the offers of competitive suppliers.
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How Does a Consumer Switch? (2) CHECK THE TERMS Make sure you
are comparing apples to apples! Default Service (EDC)Competitive
Service (EGS) Subject to PUC oversight and regulation Price changes
quarterly, but always provided at the least cost over time, with no
mark-up No cancellation other usage-based fees Generally no PUC
oversight or regulation May offer fixed prices for a specific
length of time. May offer variable prices, which can change by the
hour, day, week, or month. May impose cancellation or other
usage-based fees.
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Helpful Tools for Comparing Terms The Office of Consumer
Advocate (OCA): Electric Shopping Guide
http://www.oca.state.pa.us/Industry/Electric/elecomp/ElectricGuides.htm
The Pennsylvania Public Utility Commission:
www.papowerswitch.com
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Fixed or Variable Rates? Fixed Rate vs. Variable Rate Fixed
RateVariable Rate All inclusive per kWh price that will remain the
same for at least three (3) billing cycles or the term of the
contract, whichever is longer. If you select a fixed rate, it may
change to a variable rate at the end of the contract. An all
inclusive per kWh price that can change by the hour, day, week or
month, depending on the terms and conditions in the suppliers
disclosure statement. If you select a variable rate, it may change
with market conditions. The PUC created a helpful video explaining
these differences.
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What can really be known about variable rate contracts? NOT
MUCH No price index to track variability Limited and confusing
disclosure statements Photo credit: WITF,
http://www.witf.org/news/2014/02/spiking-electric-
bills-eyed-by-pa-public-utility-commission.php
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Sample Disclosure Statement: Variable rate products are subject
to change without notice and may change due to current and
predicted weather patterns, retail competition, wholesale commodity
energy costs, fluctuations in energy supply and demand, industry
regulations, pricing strategies, costs to serve customers, among
many factors.
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Fixed Rates Are Not Always Fixed Service Delivery Fees This
winter, due to spikes in energy costs, one supplier added an
additional fee of $5-$15. Automatic Contract Renewal At the end of
contract term, if customer does not affirmatively choose another
product with supplier, return to default service, or switch to
another supplier, they may be placed on a variable rate
contract.
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The PUC created a helpful video on this topic
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How to Switch Customer contacts the new supplier (EGS).
Supplier notifies the utility (EDC) to initiate the switch.
Proposed regulations would allow contact with utility to change
back to default service. Utility sends a confirmation letter, which
notifies the customer of a ten (10) day waiting period. The
customer can cancel the switch during this waiting period.
Canceling after the first three (3) days may result in additional
fees. Proposed regulations would eliminate the waiting period.
Effective date of switch depends on next meter read date Currently
11-45 days Proposed regulations would require the switch to occur
within three (3) business days of receipt by utility.
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So...... with all of these concerns, what should you be telling
low-income households???
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Low Income Shopping
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Are you current on your bill? If not, explain: Before the
Switch A customer CAN NOT avoid paying a past due bill by switching
to a new electricity supplier. After the Switch A customer CAN NOT
avoid paying a past due bill to a supplier by switching to another
supplier or back to the EDC. Customers in arrears to an EDC or EGS
may face termination for past amounts due. 31 Questions to Ask
Low-Income Clients
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Are you in a Customer Assistance Program (CAP)? If not, get
them enrolled in this program Explain: Information and offers may
not apply to CAP customers Marketers do not know if a consumer is
in a CAP program, so they can not provide accurate offers or
information based on CAP enrollment Supplier pricing is based on
the Price-to-Compare, not CAP rates Marketers are not a reliable
source on the process for CAP customers to shop or the consequences
on their level of assistance if they select a different supplier.
The PUC determined that all CAP customers will be permitted to
switch to an EGS, but it remains unclear what will happen to the
level of assistance they receive. 32 Questions to Ask Low-Income
Clients
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CAP Shopping Programs First Energy: Affects billed amount, not
CAP credits CAP customers receive benefits of lower costs and
suffer consequences of higher costs. PPL: Affects CAP credits, not
billed amount. CAP customers who choose a supplier with a lower
cost dont see the benefits; customers with higher price dont see
higher costs. PECO: CAP customers presently cannot shop. Proposed
CAP Shopping Plan (5/1/13): EGSs make offers to CAP customers only
if the offer does not exceed the Price-To-Compare PUC ordered PECO
to allow CAP customers to shop for any EGS Appeal pending in
Commonwealth Court - Plan stayed pending appeal. Duquesne: CAP
customers presently cannot shop. Currently developing CAP shopping
plan: Tentative plan is aligned with PECOs proposed CAP shopping
plan. Requested to delay CAP shopping plan until there is a
Commonwealth Court decision about PECOs shopping plan. 33
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CAP Shopping in PPL Territory May 2012: Over 70% of shopping
CAP customers paid more for service than they did for default
service. -Of 16,339 shopping CAP customers, 11,991 were paying more
than the PTC. 2013: Two-thirds (67%) of all shopping CAP customers
received bills that were higher than utility provided default
service.
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CAP customers who shop for electricity are more likely to:
Exceed affordable energy burdens Incur arrears Payment agreements
are not available for CAP arrears. Reach maximum CAP credits Once
the maximum is reached, CAP customers are required to pay full
rates for the remainder of the program period Face termination of
service 35 Effect of Shopping on Low-Income Households
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To avoid these potential consequences, CAP customers should be
advised to remain on default service unless the supplier can
guarantee that the price will not be higher than the PTC. 36
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Is the supplier licensed by the Pennsylvania Public Utility
Commission (PUC)? Not everyone calling, knocking on your door, or
sending you mail is authorized to do so. Check the PUC's website or
call 1-800-692-7380PUC's website Are taxes included in the
suppliers price? What is the price per kilowatt hour (kWh)? 37
Questions to Ask Suppliers Before Switching
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Is the price fixed or does it depend on time of day or amount
of usage? If fixed, for how long and under what conditions might it
change? If variable, when and how will the price change and when
will I be given notice of the change? Is there a fee or penalty for
switching suppliers? 38 Questions to Ask Suppliers Before
Switching
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Will you receive one bill or two? Dual billing could create
significant consequences because LIHEAP grants cannot be issued to
an EGSs. Is there a bonus for signing up? If so what are the
conditions for receiving the bonus and how/when will it be paid?
Does the supplier offer a choice of energy sources, such as
renewable energy? 39 Questions to Ask Suppliers Before
Switching
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In-Person Training & Manual for PHFA Housing Support
Managers In October 2014, PULP will: Distribute a Low-Income
Shopping Manual Information about the shopping process Interview
questions Checklists Tenant education materials Conduct a day
training in the Duquesne Light Company Territory
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How do you Contact Us? Harry 717-236-9486, Ext 211 Patrick
717-236-9486, Ext. 202 Liz 717-236-9486, Ext. 205 General E-mail:
[email protected]@palegalaid.net Website:
http://www.rhls.org/pa-utility-law-project/ Address: 118 Locust
Street, Harrisburg, PA 17101
